A solvency ratio measures the extent to which assets cover commitments for future payments, the liabilities.
The solvency ratio of an insurance company is the size of its capital relative to all risks it has taken.
Different countries use different methodologies to calculate the solvency ratio, and have different requirements.
For the solvency ratio, the pension liabilities are measured using stringent rules including the assumption that the plan will be close immediately so must purchase of annuities to transfer responsibility of the pensions to another party.
In finance, the solvency ratio measures a company's cash flow compared to its liabilities: Solvency ratio = (net income + depreciation) / liabilities[2]